ENERGY ADVISOR a WEEKLY PUBLICATION of the DIALOGUE April 13, 2018
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LATIN AMERICA ADVISOR ENERGY ADVISOR A WEEKLY PUBLICATION OF THE DIALOGUE www.thedialogue.org April 13, 2018 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Nigel Blackaby Global Head, OIL & GAS International Arbitration Group, Freshfi elds Bruckhaus Deringer Does Uruguay’s Guyana Has Been Mary Rose Brusewitz Too Generous Partner, Strasburger & Price ANCAP Have Deep With Early Oil Jeffrey Davidow Investors: IMF Senior Counselor, The Cohen Group Corruption Issues? One of the investors cited by the IMF, ExxonMobil, asserted that the Ramón Espinasa Consultant, terms of the deal is normal for a Inter-American Development Bank new oil play, saying “governments Luis Giusti need to incentivize companies to Senior Advisor, undertake high-risk explorations.” Center for Strategic & Page 2 International Studies Jonathan C. Hamilton RENEWABLES Partner, White & Case Steelcons Wins Raul Herrera Partner, Solar Contract Corporate & Securities Practice, in Brazil Arnold & Porter Lawmakers accepted Raúl Sendic’s resignation last year amid corruption accusations involving The Brazilian fi rm won the 270 James R. Jones his tenure as head of state oil company ANCAP. // File Photo: midimici2 via Creative Com- Chairman, mons license. megawatt contract, which begins Monarch Global Strategies in 2022, in an April 4 renewable Jorge Kamine An Uruguayan prosecutor in March asked for formal charges electricity auction held by the Counsel, against former Vice President Raúl Sendic, who resigned Electric Energy Trading Center. Skadden Arps Page 3 last year amid corruption accusations stemming from his Craig A. Kelly Q Director, tenure as head of state oil company ANCAP. Sendic denies OIL & GAS Americas Int’l Gov’t Relations, wrongdoing. Prosecutors are also seeking charges against eight other Exxon Mobil senior offi cials at ANCAP and its subsidiaries. Does ANCAP have a cor- Brazil’s Gets New Jeremy Martin Vice President, Energy & Sustainability, ruption problem? What measures are being taken to safeguard against Energy Minister Institute of the Americas future corruption allegations at the energy company? What is the Wellington Moreira Franco was Larry Pascal sworn in Tuesday as Brazil’s new outlook for Uruguay’s energy sector, and what factors are most shaping Chairman, minister of mining and energy. He Americas Practice Group, its future? previously served as secretary of Haynes & Boone the presidency under President Charles Shapiro Michel Temer and as governor of President, David D. Nelson, CEO of Global Business Policy-DC, LLC oil-rich Rio de Janeiro State. World Affairs Council of Atlanta and former U.S. ambassador to Uruguay: “Political leaders Page 2 R. Kirk Sherr President, throughout Latin America are being rocked by scandals, from Clearview Strategy Group A Lava Jato in Brazil to the extensive tentacles of Odebrecht, Mark Thurber which brought down presidents in Brazil and Peru and numerous senior Partner, Andrews Kurth offi cials including the former CEO of Pemex in Mexico—not to mention Alexandra Valderrama the wholesale looting of PDVSA in Venezuela. Even relatively transparent Manager, International Government Affairs, Costa Rica has been rocked by the ‘cementazo’ scandal. The central Chevron theme of this year’s Summit of the Americas is anti-corruption—a re- Lisa Viscidi sponse to the demands of the growing and increasingly empowered mid- Program Director, Inter-American Dialogue dle classes in Latin America. In that context, the case against Raúl Sendic Max Yzaguirre can be viewed as a demonstration of the need for constant vigilance President and CEO, even in a country rated by Transparency International as the least corrupt The Yzaguirre Group in Latin America. The allegations against Sendic and other present and former ANCAP offi cials are ‘small potatoes’ —a few thousand dollars of Moreira Franco // File Photo: Brazil- ian Government. Continued on page 6 COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ENERGY ADVISOR April 13, 2018 OIL AND GAS NEWS said that the terms of the deal is normal for NEWS BRIEFS a new oil play. “Government take is generally Moreira Franco lower in frontier plays than in established areas China’s JinkoSolar as governments need to incentivize companies Supplies Solar Modules Takes Over Brazil’s to undertake high-risk exploration,” the compa- ny said, according to the report. Government for Mexico Plant Energy Ministry receipts from the Stabroek oil play, which was Chinese fi rm JinkoSolar has supplied solar discovered in 2015, are expected to reach $700 modules for a 754 megawatt solar park in Mex- Wellington Moreira Franco was sworn in on million by 2020, doubling Guyana’s tax intake. ico, the fi rm said in a press release. According Tuesday as Brazil’s new minister of mining and The Stabroek project will bring to surface just to JinkoSolar, the project will be the largest so- energy, the government announced. Moreira 15 percent of the oil that has been discovered lar PV plant in the Americas. The plant is set to Franco, 73, previously served as secretary of so far. Mineral Resources Minister Raphael become operational in the second half of 2018 the presidency under President Michel Temer Trotman told the news service that, although and supply 1,700 gigawatt-hours of energy. No and as governor of Rio de Janeiro State, as well Guyana would not change the terms of the fi nancial details were disclosed. JinkoSolar has as stints in Brazil’s Chamber of Deputies. His existing deal, the terms for future deals would over 12,000 employees across eight production appointment comes as energy offi cials prepare facilities globally. state-owned electric utility Eletrobras for privatization later this year. Temer announced The Stabroek project will Moreira Franco’s appointment on Sunday, along Argentina’s Genneia Buys with the sudden departure of Deputy Mining bring to surface just 15 and Energy Minister Paulo Pedrosa. Moreira percent of the oil that has Stakes in Solar Farms Franco will replace Fernando Coelho Filho, who been discovered so far. Argentine energy fi rm Genneia has acquired 82 stepped down in order to run for a seat in Bra- megawatts of solar capacity in the province of zil’s Congress, Reuters reported. On Monday, San Juan, EconoJournal reported on Tuesday. Eletrobras CEO Wilson Ferreira Jr. told Reuters The company bought the shares for three solar that Moreira Franco’s appointment would be different. Other international fi rms such parks that are slated to enter the grid by the improve the chances that Congress would as Repsol, Total and Tullow Oil are reportedly end of the year, marking the fi rst time the fi rm approve the privatization of his company. exploring in Guyanese offshore areas. The IMF will develop a site in the San Juan province in According to Ferreira, Moreira Franco’s political report included other recommendations, includ- the Argentine northwest. Genneia, a leading weight improves the chances of privatization ing that Guyana improve its regulatory bodies producer of renewable energy in Argentina, will despite an unclear political environment ahead and introduce a progressive royalty scheme to debate an IPO at this month’s shareholders’ of the country’s October election. Temer’s take in additional revenue from more success- meeting, BAE Negocios reported. government hopes to complete the reforms ful projects. Offi cials in Guyana have been before the vote. working to modernize legal and regulatory mechanisms as oil and gas production ramps up, but analysts have expressed concern that, Ecuador’s Moreno Guyana Has Been Too after decades of “brain drain,” government min- Appoints Fourth Generous With Early istries lack capacity to put in place effective Electricity Minister policies. [Editor’s note: See related Q&A in the Oil Investors: IMF Jan. 24 issue of the daily Advisor.] Carlos Pérez García on April 6 assumed offi ce as Ecuador’s Minister of Electricity and Renewable Energy, the government said. Pérez, The International Monetary Fund has advised a former Minister of Hydrocarbons, takes over Guyanese offi cials in a report that the terms of Petroamazonas for Elsy Parodi Ocaña, who left the ministry last its offshore oil contract are “relatively favor- Opens New Gas- month for undisclosed reasons, Renewables able” to ExxonMobil and recommended that the Now reported. With the appointment, Pérez country rewrite its royalties laws, Bloomberg Fired Power Plant becomes the fourth offi cial to hold the position News reported Monday. According to the under President Lenín Moreno, who was report, the production sharing agreements be- Ecuador’s state-run oil company, Petroamazo- inaugurated in May 2017. Pérez García studied tween Guyana and ExxonMobil “appear to enjoy nas, last week opened a gas-fi red power plant Electronic Engineering at the University of royalty rates well below of what is observed in the Sacha Norte fi eld, El Comercio reported. Texas at Austin and worked at Houston-based internationally.” In a statement, ExxonMobil The power plant is located in Orellana province Halliburton from 1982 to 2015. COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ENERGY ADVISOR April 13, 2018 in the Amazon rainforest. According to Ecuador Inmediato, the plant is just the second of eight that Petroamazonas hopes to construct in the Sacha fi elds by 2020. El Comercio reported Advisor Video that four of the plants will be operational by the end of 2018 and will produce 15 megawatts Unconventional Oil of power altogether, saving the taxpayers $19 & Gas in Argentina million per year. The Ecuadorean government has said that the purpose of the projects is to An Inter-American Dialogue Discussion with reduce imports of diesel into the country, as Fernando Oris de Roa, Argentina’s Ambassador to the well as reduce the environmental impact of United States; Omar Gutierrez, Governor of Neuquén energy production. Petroamazonas CEO Álex Province; and Paola Carvajal, Principal, Arthur D. Little Galárraga has set the goal of completely elimi- nating diesel imports by 2020.